Reference no: EM131385949
There are two types of electric pencil-sharpener producers. “High-quality” manufacturers produce very good sharpeners that consumers value at $14. “Low-quality” manufacturers produce less good ones that are valued at $8. At the time of purchase, customers cannot distinguish between a high-quality product and a low-quality product; nor can they identify the manufacturer. However, they can determine the quality of the product after purchase. The consumers are risk neutral; if they have probability q of getting a high-quality product and 1 - q of getting a low-quality product, then they value this prospect at 14q + 8(1 - q). Each type of manufacturer can manufacture the product at a constant unit cost of $11.50. All manufacturers behave competitively.
(a) Suppose that the sale of low-quality electric pencil-sharpeners is illegal, so that the only items allowed to appear on the market are of high quality. What will be the equilibrium price?
(b) Suppose that there were no high-quality sellers. How many low-quality sharpeners would you expect to be sold in equilibrium?
(c) Could there be an equilibrium in which equal (positive) quantities of the two types of pencil sharpeners appear in the market?
(d) Now we change our assumptions about the technology. Suppose that each producer can choose to manufacture either a high-quality or a low- quality pencil-sharpener, with a unit cost of $11.50 for the former and $11 for the latter, what would we expect to happen in equilibrium?
(e) Assuming that each producer is able to make the production choice described in the last question, what good would it do if the government banned production of low-quality electric pencil-sharpeners?
Show all work
|
How to implement a j-k flip-flop starting with a d flip-flop
: Show how to implement a J-K flip-flop starting with a D flip-flop.
|
|
Feel the future of social security is at risk
: From your readings and research this week it should be apparent that many feel the future of Social Security is at risk. What are your thoughts about the future of Social Security? Should it be saved? Should future participants be allowed to inves..
|
|
Analyze the various means of tourism
: Analyze the various means of tourism (rail, automobile, and coach travel; airlines; cruise ships) to determine which sector you anticipate will grow the most in the next 20 years. Explain your rationale.
|
|
Identify the principles underlying effective behavior change
: PS360-1,PS360-2,GEL-6.2: For this unit's Assignment, you will use the concepts in this course to analyze three case studies. You should rely on the textbook readings. Be sure to include other outside research that is from peer-reviewed behavior an..
|
|
Two types of electric pencil-sharpener producers
: There are two types of electric pencil-sharpener producers. “High-quality” manufacturers produce very good sharpeners that consumers value at $14. “Low-quality” manufacturers produce less good ones that are valued at $8. Suppose that the sale of low-..
|
|
How you could change the design to reduce the failure rate
: There are no component failures, software bugs, or power glitches; and the errors occur mainly for customers who use the interface heavily. Suggest a possible cause of these failures and how you could change the design to reduce the failure rate.
|
|
Calculate the money multiplier
: Hypothetical Country has $130 in currency, $520 in reserves, and $910 in deposits. Calculate the money multiplier. Calculate the reserve ratio. Use decimal number as an answer. Calculate money supply M1.
|
|
How the united states has increased its food production
: Provide at least two recent (since the Green Revolution ended) examples of how the United States has increased its food production, and discuss how these changes have affected both the environment and food safety
|
|
Why not add more synchronizers in series
: Why do you think this reduces the problem of metastability? Why not add more synchronizers in series?
|